* Nikkei, KOSPI up around 2%

* Sources say Hormuz deal waits on Trump approval

* European CPI figures awaited; Japan data supports rate

hike bets

By Tom Westbrook

SINGAPORE, May 29 (Reuters) - World stocks stood at

record highs on Friday and oil futures eyed the steepest weekly

drop for nearly two months as traders waited for details on a

potential deal to reopen the Strait of Hormuz and extend the

U.S.-Iran ceasefire.

Sources told Reuters that the U.S. and Iran have reached an

agreement to extend their ceasefire and lift restrictions on

shipping, though U.S. President Donald Trump has yet to approve

it and Iranian state media said it had not been finalised.

Moves in the Asia morning were modest, with S&P 500 futures

steady after the index notched another record

closing high overnight. Brent crude futures fell about

50 cents a barrel to $93.17 for a weekly drop of more than 10%.

The dollar headed for a small fall on the week, which tracks

a retreat in U.S. yields. Analysts aren't sure, however, whether

that can extend, since a U.S.-Iran deal is unlikely to quickly

unwind the inflation impulse unleashed by soaring fuel

prices.

"The market's already taking the view that a deal's going to

be done and the strait is going to be open," said Jason Wong,

senior market strategist at BNZ in Wellington.

"The main point is it removes a tail risk of a really,

really bad outcome. I don't think it's a green light to take oil

down $20, or Treasuries down 20 points."

MSCI's index of world stocks edged up to a

record high, with AI-euphoria lifting chipmaker shares around

the world and pushing benchmarks in Tokyo and Seoul

up around 2% on Friday morning and toward weekly rises.

Dell was also riding the wave, with shares soaring

39% after hours when it lifted revenue and profit expectations

as data-centre demand drives sales of its AI-optimised servers.

"The question now is whether this can continue. We believe

we're still in the middle innings of a longer AI-driven

investment cycle," said Damian McIntyre, head of multi-asset

solutions at asset manager Federated Hermes. "We have revised

our S&P 500 target to 8,000 this year and 9,000 next year."

The S&P 500 closed on Thursday at a record high of 7,563.63.

YEN SQUEEZED, KIWI ATTEMPTS LIFTOFF

In fixed income, U.S. Treasury yields were steady in the

Asia day, with the 10-year yield at 4.45% for a

weekly drop of about 14 basis points. Global bond yields are

also lower on the week.

Preliminary inflation figures are due across Europe later in

the day, along with Canadian GDP.

Overnight data showed U.S. personal consumption spending,

income, home sales and GDP on the soft side of expectations, and

inflation running hot but a little bit under forecasts.

Annual core inflation in Tokyo stayed below Japan's 2% target

for a fourth straight month in May, data showed on Friday, but a

rebound in national factory activity suggested resilience and

supported the case for a June rate hike.

In currency markets the yen has been under pressure and in

focus after falling back to levels that prompted reported

Japanese intervention late in April and earlier in May.

At 159.26 to the dollar it was trading a fraction

stronger than the line-in-the-sand around 160 that authorities

have been defending. Japan's finance ministry is scheduled to

publish the amount of dollar selling it conducted, with

estimates it totalled around 8.6 trillion yen ($54 billion),

Nomura said.

The euro was firm at $1.1655. The New Zealand dollar

has been a major mover this week, up 1.8% on the

greenback, after the Reserve Bank of New Zealand held rates

steady on Wednesday but delivered a more-hawkish-than-expected

outlook.

($1 = 159.2600 yen)